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Fortune 500 Daily & Breaking Business NewsSun, 02 Aug 2015 20:25:17 +0000enhourly1http://wordpress.com/http://1.gravatar.com/blavatar/dab01945b542bffb69b4f700d7a35f8f?s=96&d=http%3A%2F%2Fs2.wp.com%2Fi%2Fbuttonw-com.png » Obamacare - Fortunehttp://fortune.com
Fortunehttps://s0.wp.com/wp-content/themes/vip/fortune/assets/images/fortunelogo.pnghttp://fortune.com25040Obamacare: the business world’s biggest disruptorhttp://fortune.com/2015/06/30/obamacare-is-the-health-care-industrys-biggest-disruptor/
http://fortune.com/2015/06/30/obamacare-is-the-health-care-industrys-biggest-disruptor/#commentsTue, 30 Jun 2015 11:00:16 +0000http://fortune.com/?p=1197005]]>While the U.S. Supreme Court has removed much of the uncertainty surrounding the future of the Affordable Care Act (ACA), the impact of this far-reaching change in U.S. health care financing and delivery will be a complex story unfolding gradually for years to come. The ACA is a huge "disruptive innovation," to borrow a popular term from the business school literature. Like other disruptive innovations, it will generate winners and losers and have a slew of unforeseen consequences. Health policy analysts will be preoccupied for years with monitoring the effects of the ACA and proposing ways of building on it to ensure that more Americans receive effective health care at sustainable costs.

"A disruptive innovation," Wikipedia informs us, "in an innovation that helps create a new market and value network, and eventually disrupts an existing market and value network (over a few years or decades)..." Turmoil, or "creative destruction," as noted economist Joseph Schumpeter put it, defines how market economies grow and prosper.

The ACA embodies disruptive innovation in at least four dimensions.

It altered competition

First, it profoundly alters the nature of competition in health insurance markets: it forces insurers away from competing with each other through trying to attract the healthiest, least costly to insure toward competing for a larger pool of customers by offering lower premiums and better service. As long as insurers were permitted to charge sicker people higher premiums, refuse coverage to customers with pre-existing conditions, and impose life-time spending limits, companies had to compete by attracting customers least likely to incur high medical expenses. The ACA put this form of competition out of bounds, but kept the insurers in the game by mandating that most people have adequate health insurance (not just a bare bones policy that wouldn't help them much if they needed it) and providing taxpayer subsidies to make the higher-standard coverage affordable to lower-income persons.

The contours of these new markets are only beginning to be visible. Both buyers and sellers are feeling their way in unfamiliar territory. Some health plans are responding by cutting deals with narrow networks of providers in order to attract customers seeking low premiums, and those narrow networks may force customers to pay more to keep a preferred provider. The disruption of familiar patterns has also accelerated defensive consolidations in both the insurer and provider markets, including many hospital acquisitions of physician practices. These consolidations threaten to limit the very competition needed to fulfill the promises of market-based reform.

It has a purely digital business model

In its second disruptive innovation, the ACA took advantage of the on-going revolution in information technology to create new electronic market places where consumers, armed with federal subsidies, can choose among health plans. Electronic marketplaces, which are also cropping up in the employer-sponsored health insurance markets, may soon become the normal venue for acquiring health insurance — if the glitches can be worked out and service improved. Major advances are needed in the quality and reliability of information displayed about alternative plans, user-friendliness of websites, and availability of well-trained assistants to help consumers navigate the sites and make appropriate choices.

It introduces new ways of paying health providers

Third, the ACA launched a flood of demonstrations and experiments involving new ways of reimbursing health providers. Some of these may be successful in moving the whole health system away from rewarding higher volume of services toward rewarding improved health and quality of care, which is what the incentives should be, but it will take time to sort out which ones work and how they fit together.

States have more say over health care policy

Fourth, and perhaps ultimately most important, the ACA introduced new challenges into the already complex interactions between state and federal government with respect to health care. The ACA is described by its opponents as federal over-reach, but it actually gives the states enormous control over how the implementation of the act plays out. Since insurance regulation is a state function, the ACA gave the states control over such vital matters as defining the geographic areas within which plans compete and determining if the plan offers adequate access to physicians and hospitals. Over the next several years, the states will have increasing opportunities to experiment with different approaches and to learn from experience--their own and each other's. Many states have obtained waivers in order to exercise more control over their Medicaid spending, and a new waiver process coming into effect in 2017 will give states far more latitude in designing their own health delivery systems than they had before the ACA.

Analyzing how all this disruptive innovation plays out in the market place will not only be challenging for economists and market analysts; the ACA may up-end challenging the standard political analysis as well. The going-in notion that blue states would embrace the ACA and implement it skillfully, while red states would sabotage it, is already proving at least partially wrong.

After last week's Supreme Court decision, red state politicians may conclude that the ACA is part of the permanent landscape and start turning it to their advantage. If governors and legislators--red, blue, and purple--seize the ACA's challenge of shaping health care to their own states' needs and desires, the results of this disruptive innovation could be a health system with far greater state-to-state diversity than we have now.

How will this all shake out? Stay tuned! But, don't expect this big, dynamic sector of our economy--18 % of the U.S. economy -- to stand still any time soon.

Following the Supreme Court ruling yesterday, Fortune's Laura Lorenzetti reported that health insurers who provide insurance through the exchanges were "among the big winners from the Supreme Court's Thursday decision to uphold Obamacare subsidies."

The largest health insurers including UnitedHealthcare UNH, Aetna AET, Cigna CI, Anthem ANTM, and Humana HUM have been in merger talks over the last few weeks. Yesterday afternoon, the Wall Street Journalsaid, "Let the deal music play. In affirming a central tenet of the Affordable Care Act for the second time, the U.S. Supreme Court has removed a major source of uncertainty for the insurance industry. That is good news for investors banking on consolidation. Indeed, within hours of the decision, Humana stock popped on renewed talk that Aetna had made an offer."

Indeed, one merger could happen as early as next week according to the New York Times, which is reporting that “A new round of consolidation in the health insurance industry appeared closer as companies seek to grow larger, driven in part by cost-cutting and opportunities that are part of the Affordable Care Act,” noting that Humana “could reach an agreement by next week” with either Aetna or Cigna making the purchase.

The scope of the mergers could be huge and result in unprecedented health insurance giants. On June 16, Fortune's Shawn Tully wrote that "In the merger world, no sector is hotter than health insurance" and that if UnitedHealth and Aetna "were combined today, they would rank fifth on the Fortune 500, leapfrogging the likes of AT&T, Ford, and Apple."

But if the number of health insurers declines, the number available to a state's consumers on the health care exchanges, which in some states is already very small, will shrink further--and provide even less choice to consumers. How could that be a good thing?

There already seems to be a renewed push to one provider following the ruling. Robert Weissman, president of Public Citizen, wrote in an email yesterday that "Health care is a right. Let's make today's Supreme Court victory the catalyst to finally getting the health care system the American people need and deserve--single-payer Medicare-for-All."

But it is curious how the market, in the form of merger interest, seems to be marching in that direction more quickly than government. Then again, maybe the market’s moves are not so surprising when we consider that a single-payer system is what is working for people in the U.S. who are over 65 (with Medicare)--and it’s what works well in many countries around the world.

With all this merger talk, the market may be telling us something if we would only put our ideologies aside and listen. Perhaps the market is suggesting that providing the nation’s health insurance is really akin to a natural monopoly--and that rather than a benefit, providing consumer choice is wasteful--and that a single-payer system is actually the best way to provide this public good with maximum efficiency.

Eleanor Bloxham is CEO of The Value Alliance and Corporate Governance Alliance (http://www.thevaluealliance.com), an independent board education and advisory firm she founded in 1999. She has been a regular contributor to Fortune since April 2010 and is the author of two books on corporate governance and valuation.

]]>http://fortune.com/2015/06/26/universal-health-care/feed/0single-payer-health-careeleanorbloxhamWhy the Obamacare decision is great for Uberhttp://fortune.com/2015/06/26/obamacare-aca-supreme-court-uber/
http://fortune.com/2015/06/26/obamacare-aca-supreme-court-uber/#commentsFri, 26 Jun 2015 20:20:35 +0000http://fortune.com/?p=1194467]]>Uber may have publicly praised Supreme Court’s Friday decision clearing the way for nationwide same-sex marriage, but a decision that came a day earlier promises a bigger impact on the ride-hailing company.

The Supreme Court on Thursday issued a decision preserving federal tax credits tied to the Affordable Care Act, also known as Obamacare. The ACA is an essential ingredient in the success of the so-called “gig economy,” wherein workers serve as independent contractors on a flexible schedule for on-demand service companies like Uber, Postmates, Instacart and more.

Because Uber and many companies like it consider their workers independent contractors instead of employees, they’re not required to provide those workers with health insurance, as the ACA only mandates that employers extend coverage to full-time employees. That loophole saves the companies a tremendous amount of money. Obamacare’s subsidies for individual insurance buyers, meanwhile, make it easier for Uber drivers and similar workers to get affordable coverage, making the work more attractive.

Uber CEO Travis Kalanick reportedly said at a November dinner that Obamacare is “huge” for his company because it frees up more workers to come drive cars for Uber when they might otherwise be tethered to a job that offers health benefits. “The democratization of those types of benefits allow people to have more flexible ways to make a living,” Kalanick said at the dinner. “They don't have to be working for ‘the man.'” (An Uber spokeswoman confirmed Kalanick's comments, but declined to elaborate further.)

Indeed, when Uber recently surveyed its drivers about whether they would prefer a “9-to-5 job with some benefits and a set salary” or one where they could make their own schedule, 73% said they would forgo the benefits package in favor of freedom, according to a report the company released in January. And Uber is making efforts to help its drivers get insured, announcing late last year a partnership with Stride Health to guide workers in choosing a plan on the government insurance exchanges.

It’s unclear, however, how much Uber is actually spending, if anything, on this ancillary benefit: Stride's services are already available for free to anyone. A spokeswoman for Uber says drivers who use Stride through Uber's "customized" app would "save time" because their personal information would already be "pre-populated" into the tool.

Still, how much longer Uber might capitalize on a combination of Obamacare and employment status rules remains up in the air. A California labor board recently found that a single Uber driver was more accurately characterized as an employee, not an independent contractor. While that decision is non-binding, it has called into question Uber’s policies regarding health insurance and other benefits. On-demand grocery service Instacart, perhaps seeing the writing on the wall, recently announced that it is experimenting with turning some of its workers into part-time employees in what could be the first step in a broader trend across gig economy companies.

For now, however, Uber is safe to celebrate. Had the Court gone the other way Thursday, it may have found its business model in serious jeopardy.

Following the U.S. highest court’s ruling backing Obamacare, shares of Humana HUM rose more than 8% on Thursday, the most of any health insurance company. Investors appear to be betting that the Louisville, Kentucky company will be the first to be bought in what looks to be a coming wave of consolidation in the healthcare market.

Aetna, the nation’s second-largest health insurer by market value, appears to be the mostly likely buyer of Humana, in a deal that set to top $29 billion. But Cigna is eyeing Humana as well. Both Aetna AET and Cigna have reportedly approached Humana about doing a deal.

Either offer could fall apart. Here’s where the current state of healthcare insurance dealmaking gets dizzying. According to Bloomberg, Humana’s board favors the Aetna deal. That’s because a large part of Cigna’s motivation for wanting to buy Humana is warding off Anthem, which has made a hostile offer for Cigna. Humana’s board may fear that if it were to go with Cigna, that company’s shareholders might still vote down the deal in favor of being bought by Anthem.

There’s more. UnitedHealthcare is rumored to be looking to make a bid for Aetna. If it did, that would probably nix Aetna’s deal for Humana.

The bigger question -- which often gets lost during these deal-making frenzies -- is if any of this makes sense. Humana is considered a prize target because of its lead in the Medicare Advantage market at a time when more Americans are crossing into the 65-and-above age bracket. The corporate insurance market, which has traditionally been the bread and butter of health insurers, has slowed. And more insurers are looking at the market for individual insurance plans, especially now that the Affordable Care Act seems safer than ever.

But all of these deals could make health insurers sick. Shares of Humana, the nation’s fifth largest health insurer, now trade at 25 times last year’s earnings. The other big four insurers trade closer to 20 times earnings. What’s more, even before the cost of the deal, Humana would add $4 billion to Aetna’s $9 billion in debt.

The case focused on language in the Obamacare law that seems to say that health care subsidies are available only to people who bought health care on “an exchange established by the state.” The plaintiffs who brought the case argued that that phrase meant that subsidies should not be available to folks who purchased insurance through the federal exchange, Healthcare.gov, that served Americans in the 34 states that refused to set up their own marketplaces.

A RAND Corporation paper painted a picture that was just as dire. It found that eliminating subsidies in the 34 states that relied on the federal exchange would have increased premiums in the individual insurance market in those states by 47%. The ramifications were not just financial. The end of subsidies would have caused enrollment in the individual market to fall by 70% in those 34 state and left 8 million Americans uninsured.

But the 6-3 decision by the Supreme Court on Thursday determined that all that fear was for naught.

Basically, the court just guaranteed that millions of customers would stay on with insurers, and that’s made investors very happy. The ruling gave some much needed clarity to stockholders concerning the fate of companies that benefit from the higher number of insured brought about by the Affordable Care Act.

The biggest public insurers in the U.S., including UnitedHealth, Anthem, Aetna, Humana and Cigna, are all up in mid-morning trading. The biggest gains so far have gone to Humana, up 2.4%, and UnitedHealth, up 1.7%.

While the Supreme Court’s Obamacare move is beneficial to these companies, some of the gains could also be attributed to the high level of acquisition interest floating around the insurance industry these days.

The King v. Burwell decision has also been great news for hospitals -- more insured customers means more secure payments. HCA Holdings, Tenet Healthcare and Community Health Systems all gained at least 9% after the ruling.

In the King decision, the Court voted 6-3 to uphold subsidies for Americans signing up for Obamacare in states that used the national insurance exchange instead of developing their own state-specific exchanges. The decision kills off what was one of the most potentially lethal challenges to President Obama’s landmark Affordable Care Act. A decision against the law could have left more than 6 million people without insurance coverage due to rising premiums that people could no longer afford.

The ruling, known as King v. Burwell, turned on whether Americans nationwide could receive subsidies to offset the cost of purchasing health care - or only those living in states where the state government had set up an exchange. Due to a quirk in the language of the so-called Obamacare law, the scope of the subsidies was unclear.

“Congress passed the Affordable Care Act to improve health insurance markets, not to destroy them,” wrote the Court in siding with the Obama Administration’s interpretation of the statute.

Chief Justice Roberts, however, also used his opinion to criticize an apparent sloppiness in how the law was written, noting “The Affordable Care Act contains more than a few examples of inartful drafting.”

Justice Antonin Scalia wrote a dissenting opinion, joined by two other conservatives, Justices Clarence Thomas and Samuel Alito.

“We should start calling this law SCOTUScare,” wrote Scalia in a dig at the court’s opinions that have now twice upheld the law. He also lambasted the majority opinion as “interpretive jiggery-pokery” and “Pure applesauce.”

Thursday’s ruling appears to reflect pragmatism on the part of the Chief Justice, who also wrote the 5-4 decision in 2012 that upheld the Affordable Care Act in the face of attacks that it was an unconstitutional tax. Given that earlier conclusion, it would have been surprising if Roberts decided to choose a statutory ruling in King that would have effectively caused the health care policy to collapse.

The key phrase at the center of the case comes in the Affordable Care Act’s reference to who is eligible to receive subsidies. The Act refers to those who avail themselves of a health care exchange "established by the State," which the Act’s opponents insisted meant “by a state government” - and not the federal exchange, which is what is available in the states whose Republican governments refused to implement an exchange.

If the Supreme Court had accepted the opponents’ argument, millions of Americans would have become ineligible for subsides. This is turn would have meant that the health care plans available to them on the federal exchange would have become prohibitively expensive.

Thursday’s reprieve also means a reprieve for the Obama Administration and for state governments, which would have had to scramble to devise a policy response for the prospect that millions of citizens would become suddenly uninsured.

“After multiple challenges to this law before the Supreme Court, the Affordable Court Act is here to stay,” President Obama, said in a public address following the ruling. “With this case behind us, let’s be clear: We’ve still got work to do to make health care in this country even better.”

On the stock market, the share price of health insurance companies all took modest jumps, as investors recognized that their supply of customers will remain stable.

The health care ruling comes amid a flurry of activity as the Supreme Court wraps up its term this month. The court is still to rule in five more cases, including Obergefell v. Hodges, which will decide if states may ban same-sex marriage. The remaining opinions will be issued on Friday and on Monday.

President Obama is expected to give a statement on the ruling at 11:30am ET.

]]>http://fortune.com/2015/06/25/in-big-win-for-obama-supreme-court-upholds-health-care-subsidies/feed/0united states supreme courtJeffHow Obamacare has impacted the uninsured ratehttp://fortune.com/2015/06/23/obamacare-uninsured-americans/
http://fortune.com/2015/06/23/obamacare-uninsured-americans/#commentsTue, 23 Jun 2015 16:30:05 +0000http://fortune.com/?p=1189952]]>An annual survey by the Centers for Disease Control and Prevention (CDC) recorded the sharpest drop in uninsured adults in 2014 since the survey began in 1997. The uninsured rate among adults under 65 dropped from 20.4 percent in 2013 to 16.3 percent in 2014. The uninsured rate among adults 19-25, especially, saw progress from 31.3 percent uninsured to 26.9 percent in 2014.

The growing prevalence of insurance reflects the start of Obamacare’s expanded coverage in January 2014. In states that accepted Medicaid expansion with Obamacare, the percentage of insured adults dropped from 18.4 to 13.3 percent — 2 percentage points more than the drop in states that refused the expansion.

But there’s still much more to do before all Americans have health insurance. The survey found that a total of 36 million people were uninsured at the time the survey was taken. Now, a Supreme Court decision is expected within the week on King v. Burwell, which will determine if the insurance subsidies given to 6.4 million Americans through the Affordable Care Act are constitutional. If not, then President Obama’s signature legislation could be crippled.

]]>http://fortune.com/2015/06/23/obamacare-uninsured-americans/feed/0Obamacare's 6-Million Target Hit As Exchange Sees Visits SurgeclairegrodenHere’s how much an Obamacare repeal would costhttp://fortune.com/2015/06/19/obamacare-repeal-cost/
http://fortune.com/2015/06/19/obamacare-repeal-cost/#commentsFri, 19 Jun 2015 19:18:39 +0000http://fortune.com/?p=1185641]]>The Congressional Budget Office has released its latest estimates for the financial cost should Congress repeal the Affordable Care Act--and it wasn’t what many Republicans were hoping for.

Repealing Obamacare would add as much as $353 billion to the U.S. budget deficit through 2025, the non-partisan CBO found. When taking into account the economic effects of future policy changes -- what’s called “dynamic scoring” -- the deficit inflation would be closer to $137 billion.

That’s a pretty big sum, especially given that a CBO review in 2012 estimated that rescinding the law would add about $109 billion to the deficit over a decade.

While getting rid of the law would generate savings by ending insurance subsidies to millions of Americans, those savings would be surpassed by reversing the law’s cuts to Medicare and scrapping its various tax tax increases, the CBO said. It would also increase the ranks of the uninsured by 19 million next year.

Despite the ballooning deficit, repealing the act would help boost economic activity by 0.7% over the 2021-2025 time period. The gains would primarily be a result of more workers entering the labor force, according to the CBO analysis. That fits in with past analyses from the agency that predicted many workers would leave the labor market if they didn’t have to rely on an employer for insurance benefits.

The new report comes as lawmakers, citizens and industry players await a decision from the Supreme Court on whether or not the ACA’s insurance subsidies are legal. If the subsidies are struck down, it could unravel many of Obamacare’s central tenets and possibly even lead to a “death spiral” of rising insurance costs for many people.

]]>http://fortune.com/2015/06/19/obamacare-repeal-cost/feed/0131217195916-odd13-27-obamacare2lorenzettifortune50252-land-figure1UnitedHealth-Aetna colossus would overtake Apple on the Fortune 500http://fortune.com/2015/06/16/unitedhealth-aetna-merger/
http://fortune.com/2015/06/16/unitedhealth-aetna-merger/#commentsTue, 16 Jun 2015 17:49:51 +0000http://fortune.com/?p=1178517]]>In the merger world, no sector is hotter than health insurance. The biggest U.S. carriers are all engaged in a round-robin of talks that that could reshape the five market leaders--themselves the product of frenzied consolidation--into just two colossi, and one odd-carrier-out.

The Wall Street Journal is reporting that Anthem, the nation's second largest insurer, has bid $175 a share for No. 5 ranked Cigna. That's a 27% premium; though Cigna has reportedly spurned Anthem's overtures, its stock has already jumped from $137.50 when the reports broke early Monday, to $152 by mid-day Tuesday. Indeed, investors are giving plenty of credence to the merger-mania scenario.

Humana (ranked fourth among the big insurers) is considered a jewel because of its strength in Medicare Advantage, a private version of the federal program for retirees. Rumors are flying that Aetna (No. 3) is eyeing Humana. The reports have pushed Humana's shares from around $180 on May 28 to as high as $217, a gain, at the peak, of $5.6 billion.

The industry leader, by a wide margin, is UnitedHealth Group UNH. Given its already immense size, UnitedHealth doesn't need a deal. It's extremely strong across the major markets: Medicare Advantage, programs for corporations, pharmacy benefit plans, and back-office outsourcing for physicians groups and hospitals. But now, reports are rife that UnitedHealth is joining the roundelay by courting Aetna AET.

UnitedHealth is a shooting star within the Fortune 500. Its growth has been especially spectacular since its CEO, Stephen Hemsley, began effectively running the enterprise as COO in mid-1999, rising to the top job seven years later. Over that 16- year span, UnitedHealth's sales have jumped from $17.3 billion to $130.5 billion, catapulting the carrier 84 places on the Fortune 500 to No. 14 on the current list, which ranks companies by their 2014 sales. Since Hemsley took charge, UnitedHealth's stock has risen 1700%, delivering 19.6% annual returns to investors.

That performance puts UnitedHealth in a position to acquire Aetna. In theory, bigger is the way to go. Greater scale should lower the IT and other overhead costs of recruiting new customers and managing claims. Greater heft would also strengthen an insurer's bargaining power with hospitals and physician groups, which are also gaining power through consolidation. Such negotiating advantages are especially crucial to gaining share in the rapidly expanding state exchanges established by the Affordable Care Act.

If UnitedHealth were to purchase Aetna, it would boast $189 billion in sales. If the carriers were combined today, they would rank fifth on the Fortune 500, leapfrogging the likes of AT&T (No. 12), Ford Motor (No. 9), and Apple, the current No. 5. That mega-merger would make UnitedHealth the world's largest healthcare company, a position now held by drug-delivery provider McKesson (No. 11). Only the perennial top two on the Fortune 500, Wal-Mart and Exxon, would be significantly larger than a UnitedHealth-Aetna combination.

Of course, that union could leave Humana an orphan, since Aetna would vanish as a potential acquirer. In fact, rumors of an Aetna-UnitedHealth merger has hammered Humana's stock from a peak of $217 to around $200 at mid-day on June 16.

It's impossible to say if such a deal will actually happen. Given UnitedHealth's fantastic success on its own, and the risks of major disruption from integrating two complex businesses, the merger seems unlikely. Still, investors in both camps are getting pumped. Usually, when rumors of a big merger hit, the target's stock surges, and the acquirer's falls. This time, shares of both are rising, demonstrating that shareholders think that bigger would be better, even when it costs the buyer a fat premium. On June 16, Aetna's shares had risen by about 3% as of 1 p.m., and UnitedHealth gained around 2%. Combined, their market caps surged to well over $3 billion.

Trained as an accountant, Hemsley is a master of using dollops of new capital to generate tons of extra profits. He'll carefully weigh the extra stock and cash that a merger would require against the added cash it would generate. This cool, Cartesian thinker knows a good deal, and won't be swayed by deal fever.

]]>http://fortune.com/2015/06/16/unitedhealth-aetna-merger/feed/0UnitedHealth Retail Stores Sell Insurance With A SmileshawntullyGot Obamacare? Your premiums are (probably) about to go way uphttp://fortune.com/2015/05/22/obamacare-premiums/
http://fortune.com/2015/05/22/obamacare-premiums/#commentsFri, 22 May 2015 12:30:01 +0000http://fortune.com/?p=1133231]]>President Obama’s signature legislative achievement–the healthcare law popularly known as Obamacare–is facing a potentially existential fight in the Supreme Court in 2015.

But it’s not just the courts that supporters of the program need to worry about. According to a report published Friday in the The Wall Street Journal, health insurers are requesting the right in many states to increase premiums by upwards of 50%. Health Care Service Corp.–the leading health insurer in New Mexico, has asked state regulators to allow it to increase its premiums on average by 51.6%, for instance. Customers of CareFirst BlueCross BlueShield in Maryland may face an average premium increase of 30.4%.

Insurers will have to submit their premium-hike proposals to their state regulators, and potentially the federal government. Regulators will review the requests, and may deny the insurers requests if rising costs don’t justify premium increases. But big rate hikes could be necessary to prevent insurers from taking a loss. According to the report:

BlueCross BlueShield of Tennessee . . . said it lost $141 million from exchange-sold plans, stemming largely from a small number of sick enrollees. "Our filing is planned to allow us to operate on at least a break-even basis for these plans, meaning that the rate would cover only medical services and expenses--with no profit margin for 2016," said spokeswoman Mary Danielson.

It’s not all bad news, however. Obamacare insurers in some states–like Indiana, Connecticut and Maine–are asking for minimal or no increases to their premiums.

]]>http://fortune.com/2015/05/22/obamacare-premiums/feed/0471432773christopherrmatthewsWhose idea was it to give Jeb Bush an Apple Watch?http://fortune.com/2015/05/15/whose-idea-was-it-to-give-jeb-bush-an-apple-watch/
http://fortune.com/2015/05/15/whose-idea-was-it-to-give-jeb-bush-an-apple-watch/#commentsFri, 15 May 2015 11:38:51 +0000http://fortune.com/?p=1122742]]>I know I shouldn’t pick on Jeb Bush, who probably knows less about health care technology than he does about international relations. But the argument he made Thursday for repealing Obamacare — made while pointing at the Apple Watch on his wrist — may be even dumber than his remarks about invading Iraq. As reported by several newsservices:

On this device in five years will be applications that will allow me to manage my healthcare in ways that five years ago were not even possible. I’ll have the ability, someone will, you know, because of my blood sugar, … someone will send me a signal it’ll come here, I’ll get a double beep saying ‘you just ate a butterscotch sundae or something like that. You went way over the top. You’re a diabetic, you can’t do that’ -- whatever, we’ll be able to guide our own healthcare decisions in a way that will make us healthy. Ultimately, we have to get to a health system, away from a disease system.

To unravel this I think we need to push power back to the states. I think that we should repeal Obamacare if given the opportunity, and replace it with a consumer directed model where people are engaged in making healthcare decisions for themselves and where they’re given the tools to do so.”

His answer to the Affordable Care Act, it seems, is to give every citizen an Apple Watch. How the device will know that you ate a butterscotch sundae is left to the software engineers.

]]>http://fortune.com/2015/05/15/whose-idea-was-it-to-give-jeb-bush-an-apple-watch/feed/0453382264036Philip Elmer-DeWittFive years in, Obamacare fears haven’t come to pass, study findshttp://fortune.com/2015/03/26/obamacare-fears-unfounded/
http://fortune.com/2015/03/26/obamacare-fears-unfounded/#commentsThu, 26 Mar 2015 20:32:59 +0000http://fortune.com/?p=1054707]]>Five years ago this week, President Obama signed into law the Affordable Care Act, which promised to extend insurance coverage to millions of uninsured Americans and raised fears that doctors would be inundated with new and sicker patients. But it looks like those fears haven’t come to pass, according to a new study.

Doctors across the nation have only seen a slight increase in the number of new patients even as nearly 10 million Americans gained insurance coverage since the launch of ACA-mandated exchanges a year ago, according to a study by health care technology company athenahealth ATHN and the Robert Wood Johnson Foundation.

“Amongst other findings and counter to what many predicted, we haven’t seen a swell of new and sicker patients materialize in primary care or across specialty settings,” said Josh Gray, vice president of athenahealth’s research arm. “The findings are fascinating. It’s a front row seat into how policy is translated into care trends, utilization and access across the U.S.”

For instance, primary care practitioners had 22.9% of their visits from new patients last year, up from 22.6% in 2013. That is only a 1.3% increase year-over-year, and the new patient influx has been less pronounced for obstetricians/gynecologists and other specialty practitioners.

More importantly, these new patients haven’t been sicker or more complex than previous entrants. A measure of provider effort, which accounts for time, skill and intensity required in different procedures, remained constant while the number of “high complexity” evaluation and management procedures declined to 7.5% last year from 8% in 2013 for all visits.

The study was based on a subset of 16,000 health care providers culled from athenahealth’s database of more than 62,000 medical providers across about 100 specialties nationwide. It used data aggregated from the company’s ambulatory-care software platform, a cloud-based system for managing patient health records, billing and communication. The information represents actual patient-provider encounters rather than less-reliable self-reported responses.

The biggest change for doctors since the implementation of the ACA has been how they are getting paid. As insurance coverage has expanded, the mix of who pays physicians has changed in many states.

Following the Supreme Court’s decision on the constitutionality of the ACA in 2012, states were able to decide if they wanted to increase the number of individuals who qualify for Medicaid. About half of the states decided to do so, while the rest generally maintained their existing approaches to Medicaid eligibility.

In states that expanded Medicaid access, doctors have reported an increase in the proportion of Medicaid patients. Those in states that have stayed with the status quo have had an uptick in the proportion of patients with commercial insurance coverage.

“The providers in these non-expansion states are likely seeing more patients newly insured through the health care marketplaces,” according to the report.

Last year was pivotal for ACA as its central provision on expanding coverage took effect and millions of Americans became newly insured. But much of the law remains in flux as it faces challenges in the Supreme Court and efforts by some members of Congress to revise the law.

U.S. stock futures are little changed this morning after yesterday’s market decline, the biggest in two weeks. European shares are also flat in mid-day trading, while Asian markets closed with slight gains.

Here’s what else you need to know today.

1. Meet the new Kraft Heinz Company.

Kraft Foods Group KRFTwill merge with ketchup maker H.J. Heinz after Brazilian private-equity firm 3G Capital teamed up with Warren Buffett’s Berkshire Hathaway to purchase the maker of packaged foods such as Philadelphia Cream Cheese and Velveeta. Kraft’s shareholders will receive 49% of shares in the combined company, plus a special cash dividend of $16.50 a share, the companies said. Berkshire and 3G will also invest another $10 billion in the combined company. Kraft has recently faced sluggish growth in the U.S., its main market, as consumers turn to natural and organic ingredients. Its also had to contend with a massive recall of its namesake Macaroni and Cheese and a shakeup in its top leadership in recent months.

2. Facebook hosts its annual F8 developers conference.

The social networking giant kicks off its annual conference in San Francisco today and is expected to unveil new ways for developers to work with its products. Many are anticipating new initiatives for Facebook’s Messenger communication app and its Instagram photo sharing platform. CEO Mark Zuckerberg will take the stage at 10 a.m. PT to deliver a keynote address. The F8 annual meeting has traditionally focused on consumer-facing initiatives, but in recent years Facebook FB has shifted its focus to developers as it finds better ways to help app creators interact with the social network’s nearly 900 million users.

3. Hong Kong-based Hutchison Whampoa buys Britain’s O2.

Hutchison Whampoa, owned by billionaire Li Ka-shing, Asia’s second-rich man, agreed to buy the wireless network O2 from Spain’s Telefonica for 10.25 million pounds ($15.3 billion). The purchase will create Britain’s biggest wireless provider by customers. Hutchison had been in exclusive talks with the company for nearly two months and will merge the O2 with its Three business. Li has been working to diversify Hutchison’s portfolio and find ways to insulate the retail-to-ports group’s sales from the ups and downs of economic cycles.

4. Clean air regulations hang in the balance.

Clean air regulations put in place by President Obama are being challenged in the nation’s highest court, where arguments for the case will be heard today. Opponents say new regulations that control levels of mercury and other airborne pollutants would cost businesses billions of dollars to implement and that wasn’t taken into consideration by the Environmental Protection Agency as it should have. According to the Clean Air Act, the EPA was given power to regulate electric utilities as it was deemed “appropriate and necessary.” Opponents believe that “appropriate” should include cost estimates, though the agency made the decision without regard for expense.

5. Happy 5th birthday, Obamacare.

The Affordable Care Act was signed into law by President Obama five years ago this week, and the president is making the rounds today speaking at a meeting public and private health care providers and meeting with the health and human services secretary. Since its approval, the act has expanded insurance access to more than 16 million new people, according to government tallies. That includes 14 million adults that gained coverage either through the exchanges established by the ACA or via expanded access to Medicaid. Another 2 million young adults under age 26 gained coverage because of a provision that allows them to remain on their parents’ plan.

]]>http://fortune.com/2015/03/25/kraft-heinz-facebook-f8-conference-5-things/feed/0lorenzettifortuneHappy 5th birthday Obamacare, now what?http://fortune.com/2015/03/24/happy-5th-birthday-obamacare-now-what/
http://fortune.com/2015/03/24/happy-5th-birthday-obamacare-now-what/#commentsTue, 24 Mar 2015 16:15:20 +0000http://fortune.com/?p=1050290]]>The Affordable Care Act (ACA), like President Clinton's health plan in the 1990s, made the mistake of trying to achieve coast-to-coast health care coverage with a system that essentially looks the same everywhere. That approach was always going to be a challenge. US health care is an enormous and complex economy in its own right. If the US health system were a separate national economy, for instance, it would be the fifth largest economy in the world - larger than the entire economy of France or of Britain. The idea that a single piece of legislation could successfully reorganize the world's fifth largest economy was a fantasy, especially when the bill had to go through the congressional sausage-making machine.

It's true that the ACA gave Americans a choice of plan on federal or state-run exchanges. But the ACA still sought a template for insurance rules, benefits and other structural features that would be the same from Vermont to Texas and Florida to Alaska. That was unwise. The continuous political warfare since the enactment of the legislation reflects the fact that different parts of the country have very different views of how health care should be organized.

On this fifth anniversary of the ACA this week, both proponents and opponents of the program should pause to consider what we actually mean by an "American" health care system. Much like we think of an American K-12 education system, we really mean this: a set of national values and goals about health coverage and services that characterizes healthcare for all Americans, but a variety of pathways for reaching those objectives.

Americans actually agree on the broad objective of access to at least a basic set of health services that are affordable both for individuals and taxpayers. There is debate at the margin about what level and quality of services counts as "basic," and what conditions might be applied under certain circumstances – such as some form of work requirement for able-bodied adults seeking Medicaid coverage. There is also disagreement about the appropriate degree of involvement by government. Still, there is a good measure of agreement on what we might call the "philosophy" of a health system, or in other words its broad goals and values.

The really intense disagreement is about the "engineering" of a system, particularly when engineering elements of a national program conflict with what some see as bedrock principles. The strong objection to mandates requiring particular forms and levels of coverage is an example.

The solution to these conflicts over engineering is to allow different structures to be adopted. That permits us to explore the best technical ways to, say, provide quality but affordable services to low-income families or organize insurance markets such that they are stable and efficient. Different approaches also permit regional diversity within the broad bounds of national values and goals.

Amending the ACA to unleash federalism and permit states much greater flexibility to innovate is the way to achieve such a truly American health system.

This is already happening to a modest degree since the Supreme Court struck down the ACA's requirement that all states increase Medicaid eligibility to 138% of the federal poverty level. Using its limited waiver authority, the Administration has been negotiating with such states as Arkansas and Indiana on a variety of ways to subsidize coverage for individuals who would otherwise have been covered by Medicaid - but where the state objected to Medicaid's engineering.

But we need to go much further. In 2004, well before President Obama was elected and prospects for national legislation on coverage were very dim, I co-authored a proposal that would have allowed states to pursue virtually any plausible approach to increase coverage. States would have had to offer a plan that met certain conditions, such as not discriminating against high-cost individuals, and achieving expanded coverage. Rather than seek a federal waiver for plans, groups of states - likely combinations of liberal and conservatives states - would have been able to apply for congressional approval of their proposals after clearance from a state-federal commission.

While my co-author feels the ACA is the national legislation that makes our 2004 proposal undesirable now, I believe that a version of it is exactly the approach needed to develop an American health system that addresses today's engineering disputes - including dealing with the fallout from a King v. Burwell Supreme Court decision favoring the plaintiffs.

The vehicle for a revamped version of that 2004 proposal is, ironically, within the ACA itself. In urging Republicans to adopt a different strategy on the ACA, I've pointed out that Section 1332 of the ACA would allow states sweeping flexibility to achieve the coverage requirements of the law. The flexibility includes exemptions from employer and individual mandates, and abandoning exchanges for other ways of organizing a market for plans.

The snag is that the provision does not kick in until 2017 and would require Administration approval - so President Obama's successor could nix a state plan he or she opposed.

Like others, I believe the right strategy now is to do at least two things:

1. Advance the effective date of 1332 to at least 2016, and better yet, even earlier if a King decision this summer blocks subsidies to federal exchanges.

2. Reduce the power of any White House to thwart a state solution either by legislating automatic approval of categories of state approaches or by a process that makes congressional approval an alternative to an Administration waiver.

In parallel with this state-led strategy to allow an assortment of engineering approaches to building a national system, we also need to unleash states to become a key player in tackling health care spending. The way to do that is to give states an incentive to propose strategies that combine private, as well as state and federal initiatives that could reduce the total costs of Medicare, Medicaid and other programs by allowing the states to negotiate a share of the demonstrated savings.

After five years of the ACA, the Obama Administration and many congressional supporters of the ACA still seem to see state flexibility as a concession, even a necessary evil. But if we are to achieve an American health system that works effectively and in the future can gain wide support, the states need to be at its very center.

Stuart Butler is a Senior Fellow in Economic Studies at The Brookings Institution.

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]]>http://fortune.com/2015/03/24/happy-5th-birthday-obamacare-now-what/feed/0Obamacare turns 5 years oldnt2192Why Starbucks has no business talking about racehttp://fortune.com/2015/03/23/why-starbucks-has-no-business-talking-about-race/
http://fortune.com/2015/03/23/why-starbucks-has-no-business-talking-about-race/#commentsMon, 23 Mar 2015 19:00:42 +0000http://fortune.com/?p=1048919]]>Starbucks is getting plenty of criticisms over its new efforts to get people talking about race relations.

The company recently encouraged its baristas to write the words "race together" on cups before handing them to customers. The goal apparently was to get people talking about an important social issue in a productive way, but the effort has sparked a backlash as the company announced on Sunday that its baristas will no longer write messages on customers’ cups.

While the company’s campaign will continue, some people are using the opportunity to highlight the fact that the senior management team at Starbucks is not racially diverse. Instead of getting the Starbucks community productively talking about race in America, the move has exposed the coffee chain to an outpour of criticisms that eventually led Starbucks' senior vice president of communications to take down his Twitter account.

The issue raises an important question for business leaders: when should a company take on controversial social issues?

There is an important distinction between a controversial issue and a broadly popular cause.

Cause marketing is not likely to get a brand into trouble. People don't get mad at Pedigree when the brand supports dog adoption. It is hard to be against dog adoption. There is little backlash when Yoplait raises money for breast cancer research or when Budweiser salutes America's veterans.

Controversial issues are very different. These are topics that are polarizing. They are complicated matters about which a people strongly disagree.

There is no shortage of these topics. Tax policy, same-sex marriage and global warming are all polarizing issues. The death penalty and abortion are others.

Should a brand publicly wade into these topics?

The short answer is no. There is no reason for most brands to get involved in these debates.

The problem is that any effort to engage in the topic will create bad feelings. If a company announces its support for capital punishment, for example, some customers will be upset. They might leave. Employees, too, might disagree and depart. This all creates a problem for the company, as sales decline and good employees flee.

There are only two reasons when a public company should take on one of these issues.

First, a company should get involved when the issue directly impacts the firm's business interests. In this case, the firm should take a stand, even though doing so may prompt a backlash. Nuclear power, for example, is a controversial issue but a company such as Southern Company SO needs to be part of the debate because it is investing billions in building a new nuclear plant. People debate the merits of ObamaCare, but Andy Puzder, CEO of CKE Restaurants, parent of Carl's Jr. and Hardee's, took a strong stand earlier this year opposing it because the legislation directly impacted his business.

Second, a company should get involved when the issue impacts the firm's core values. General Mills, for example, made a bold move in 2014 by airing an ad during the Super Bowl featuring a bi-racial couple. The decision was symbolic and intentional; General Mills GIS was communicating to employees and customers that it accepted and supported all sorts of families. The same year, Coke also aired a spot during the Super Bowl that featured same-sex parents -- again taking a visible stand.

Taking up issues that do not have a direct business impact or support company values is asking for trouble. In some ways, it is irresponsible for a public company CEO to do so. A CEO is hired by shareholders, at least in theory. The last thing a CEO should do publicly is to take a stand on a social issue that he or she personally believes in but has little impact on a business.

Private companies are different. If the owners of a privately-owned brand have a strong point of view, they can certainly voice their opinions. They may well hurt their business in the process, but that is a tradeoff they might be willing to make. Hobby Lobby, for example, is a privately-owned company that has taken a strong stand on social issues. Dan Cathy, CEO of Chick-fil-A, voiced his opinion on issues including same-sex marriage. Privately-held Koch Industries is a well-known supporter of conservative causes.

Starbucks SBUX is a public company and should be cautious about engaging in debates about complex social issues. CEO Howard Schultz was well aware that the campaign would be controversial. He apparently noted in a video to employees, “Some people have said, ‘Howard, this is not a subject we should touch. This is not for you. This is not for a company. This is for someone else.’ I reject that. I reject that completely.”

In hindsight, it is hard to see how Starbucks benefits from a discussion on race relations. It is a difficult topic. People have different views about how individuals are treated. The Starbucks brand isn't based on a particular view of race. People don't visit or avoid a Starbucks because of its social views.

Brands like Starbucks should think carefully about publicly jumping into debates about issues that are polarizing and difficult unless there is a compelling need to do so.

Tim Calkins is a clinical professor of marketing at the Kellogg School of Management at Northwestern University.

]]>http://fortune.com/2015/03/23/why-starbucks-has-no-business-talking-about-race/feed/0Race Together Starbucksnt2192Roberts, Obamacare’s savior in 2012, seems inscrutable this timehttp://fortune.com/2015/03/04/roberts-obamacares-savior-in-2012-seems-inscrutable-this-time/
http://fortune.com/2015/03/04/roberts-obamacares-savior-in-2012-seems-inscrutable-this-time/#commentsWed, 04 Mar 2015 22:59:16 +0000http://fortune.com/?p=1017710]]>(REUTERS) — U.S. Chief Justice John Roberts, who cast the decisive vote in 2012 to beat back the first major challenge to President Barack Obama’s healthcare law, kept his cards close on Wednesday.

And the man who occupies the center chair on the Supreme Court’s mahogany bench and often dominates arguments seemed to remain deliberately inscrutable.

Roberts asked few questions, none revealing his view of the challenge to the crucial tax-credit subsidies that help low- and moderate-income people buy insurance under the 2010 law. His first question came late in the arguments of the challengers’ lawyer and was, in fact, more of a joke.

As liberal justices pounded Michael Carvin for altering his stance on the necessity of the tax-credit subsidies to Obamacare from his view in the failed 2012 court challenge, Roberts remarked, “Mr. Carvin, we’ve heard talk about that other case. Did you win that other case?”

As spectators began to laugh, Roberts said, “So maybe it makes sense that you have a different story today.”

Carvin, at the time representing a small-business group, lost when Roberts joined the court’s four liberals to uphold Obamacare.

On Wednesday, Carvin argued on behalf of Virginians enlisted as plaintiffs by a libertarian group opposed to Obama’s signature domestic policy achievement.

In 2012, Roberts, a shrewd 60-year-old former corporate lawyer appointed by Republican President George W. Bush, drew the condemnation of fellow conservative justices and much of the right-wing legal community for preserving Obamacare.

Roberts never responded publicly to conservatives’ claims he was a traitor or to liberals’ praise of him as a savior. His few words on Wednesday suggested he knows he is being watched as the possible pivotal vote again.

One clue to Roberts’ thinking might have emerged near the end of the 85-minute oral argument when U.S. Solicitor General Donald Verrilli said the court regularly defers to Internal Revenue Service interpretation of tax laws.

Here, the IRS has said the tax-credit subsidies should be given to people who buy insurance on federally run as well as state exchanges.

“If you’re right,” Roberts said, “that would indicate that a subsequent administration could change that interpretation.”

Verrilli said the next administration would “need a very strong case” to make a switch.

Roberts may be suggesting he is open to ruling for the government while ensuring Obama’s successor in the White House an opportunity to reinterpret the law.

His fellow justices will get the first glimpse of Roberts’ views on Friday when they privately take their customary preliminary vote on the week’s cases. The vote always starts with him.

]]>http://fortune.com/2015/03/04/roberts-obamacares-savior-in-2012-seems-inscrutable-this-time/feed/0Image (2) john_roberts_jr2.jpg for post 306938huddlestontomFacebook’s Q&A, hiring up, and Abercrombie’s drop — 5 things to know todayhttp://fortune.com/2015/03/04/facebooks-qa-hiring-up-and-abercrombies-drop-5-things-to-know-today/
http://fortune.com/2015/03/04/facebooks-qa-hiring-up-and-abercrombies-drop-5-things-to-know-today/#commentsWed, 04 Mar 2015 13:29:34 +0000http://fortune.com/?p=1015521]]>Stocks look set to move slightly higher Wednesday, days after the Nasdaq moved above 5,000 for the first time in 15 years.

Investors are digesting data on private-sector hiring and retail earnings this morning, and later Chicago Fed President Charles Evans, one of the Federal Reserve’s most dovish policymakers, will give his views on the economy ahead of a key Fed policy-setting meeting in mid-March. Also on tap today: the Federal Reserve will issue its so-called Beige Book, a compendium of anecdotes on the health of the economy.

Here's what else you need to know about today.

1. Hiring in focus.

ADP issued the National Employment Report for February this morning. Private employers added 212,000 jobs, slightly below the 220,000 estimated. Later, the Institute for Supply Management releases its non-manufacturing index for February. Analysts expect a reading of 56.5, according to a Reuters poll. Also, financial data firm Markit releases the final reading of its Purchasing Managers Index for the service sector for February.

2. Abercrombie’s profit falls.

Teen apparel retailer Abercrombie & Fitch ANF said Wednesday its quarterly profit fell by a third, hurt by low demand for its Hollister and namesake brands, discounts and a strong dollar. The company’s net income fell to $44.4 million, or 63 cents per share, in the fourth quarter ended Jan. 31, from $66.1 million, or 85 cents per share, a year earlier. Net sales fell 14% to $1.12 billion, while total comparable sales fell 10%.

3. Obamacare debated.

The Supreme Court’s nine justices will today hear arguments on the future of President Barack Obama’s landmark healthcare law. The case could derail the Affordable Care Act (ACA), commonly referred to as Obamacare, and potentially increase the cost of insurance for millions across the U.S. Click here for what you need to know about King v. Burwell.

4. Ask Zuck a question.

Later Wednesday, Facebook FB Chief Executive Mark Zuckerberg will interact with the public and answer questions on a webcast from Barcelona through a webcast, in the latest of his series of “town hall” events. You can register to ask a question here.

5. Toyota diversifies.

Toyota TM on Wednesday promoted more foreigners to senior posts, including the first woman and first African-American to hold executive titles, diversifying a management team long dominated by Japanese men. The world's biggest automaker appointed Europe chief Didier Leroy to become one of six executive vice presidents (EVP) effective after the company's annual shareholders' meeting in June. He would be the first foreigner to become a Toyota EVP, the highest post to be held by a non-Japanese.

--Reuters contributed to this report.

]]>http://fortune.com/2015/03/04/facebooks-qa-hiring-up-and-abercrombies-drop-5-things-to-know-today/feed/0Facebook Chief Executive Officer Mark Zuckerberg Hosts Internet.org SummitrolandattimeincThe Supreme Court’s decision on health care subsidies — what you need to knowhttp://fortune.com/2015/03/03/supreme-court-obamacare/
http://fortune.com/2015/03/03/supreme-court-obamacare/#commentsTue, 03 Mar 2015 19:20:36 +0000http://fortune.com/?p=1012266]]>The Supreme Court is set to hear arguments Wednesday in a case that could derail the Affordable Care Act (ACA), commonly referred to as Obamacare, and potentially increase the cost of insurance for millions across the U.S. It’s a big deal, and it has insurance companies, medical providers and everyday workers holding their breath.

Here’s what you need to know about King v. Burwell before the case kicks off in the nation’s top court.

What’s the case about?

In short, it’s about the legality of insurance subsidies provided by the federal government under the ACA to only those people enrolled through federal exchanges (i.e. Healthcare.gov).

The ACA established exchanges where individuals and small businesses could buy coverage. The intention was for the states to do this on their own, but 34 states chose not to. Therefore, the federal government stepped in and launched Healthcare.gov for anyone in those particular states who wanted to shop for coverage.

The exchanges are where the subsidies come into play: the government allows for a subsidy for anyone registered through an exchange who cannot financially handle the full cost of a healthcare plan. According to the government’s interpretation of the ACA, the subsidy is available to anyone who buys insurance through any exchange, whether it was established by the federal government or a state.

The King prosecution disagree. The ACA bill states the subsidies apply to “an Exchange established by the State,” and therefore the challengers allege that anyone who purchased coverage through a federal exchange is not eligible for a subsidy. Subsidies would only apply to those who bought coverage through a state-run exchange.

What’s at stake?

If the Supreme Court rules in favor of King, it would end up leaving millions without insurance because they would not longer be able to afford the premiums, or the deductible. Last year, over 5 million people bought insurance on federal exchanges and about 87% of them qualified for subsidies. If those people opt out of buying insurance, it could end up making everyone’s healthcare a lot more expensive in the affected states.

What could happen if the subsidies are struck down?

The worst case scenario? A “death spiral” of rising insurance costs for everyone in the 34 states where federal subsidies would no longer apply, according to Simon Lazarus, senior counsel to the Constitutional Accountability Center.

Here’s how the death spiral could work: If healthy people opt out of insurance coverage because it’s not worth the price (which would be the case without subsidies for many low- and middle-income Americans), the population buying into the system would be weighted toward relatively sick people who value the coverage even at higher prices. In order to be able to afford these clients, insurance companies will raise premiums, which in turn causes more people to leave the market. The cycle would repeat itself, spiraling until insurance rates are unwieldy, even to the point where insurers leave the individual market altogether.

“People who don’t have group health policies will see premium rates skyrocket. So, many of them will decide not to hold policies.” said Lazarus. “This ‘death spiral’ happened in the 1990s, and it’s what the ACA was designed to avoid.”

In the 1990s a handful of states implemented laws that made insurers cover everyone, despite their health status, and offered no subsidies. The result was that insurance premiums skyrocketed and the number of people opting into the insurance pool went down. Sicker people continued to buy insurance even as prices grew, and more and more healthy people fled. Insurance companies abandoned the individual market in some of these states because it became financially unfeasible, and in the states where they remained, prices stayed very high.

If the subsidies disappear and a number of low-income, relatively healthy people opt out of insurance coverage, that could destabilize the market for everyone in those states. An economic forecast by the RAND Corporation estimates that prices could rise by as much as 47% and enrollment in the individual market would fall by about 70%. That means about 8 million people in the 34 affected states could become uninsured if the subsidies disappear.

Would that mean the end of Obamacare?

Not totally. The expansion of Medicaid will remain in place for all individuals who earn up to 138% of the federal poverty level, and states that established their own exchanges will not be affected. However, across more than half the U.S., the ACA will essentially be gutted.

“One thing that you’ll get is an even sharper and sadder gap in the quality of health care between relatively blue [liberal] and relatively red [conservative] states,” said Lazarus.

There are three key components of the ACA. First, the insurance reforms, which guarantee universal access to insurance despite any pre-existing conditions. Second, there is the individual mandate, which ensures there is a balanced pool of healthy and unwell subscribers. Third, there are the tax credits and subsidies that ensure everyone can afford coverage.

“Remove one leg and the whole thing falls apart,” Lazarus explained.

A ruling against the government would make the individual mandate moot in many cases, since it can be waived if a person cannot find affordable insurance, which is especially likely if the “death spiral” takes place. This could all add up to a 1990s-style implosion for states that don’t have their own exchanges pending the Supreme Court’s final decision come June.

If you love shopping and fashion, this week has plenty of news for you. A slew of retail companies will report earnings and two big fashion shows in Milan and Paris will. If that isn’t enough, the Supreme Court will hear arguments about a case involving Obamacare.

Here’s what you need to know for the week ahead.

1. Retail earnings abound

Abercrombie & Fitch ANF, which saw its embattled CEO Michael Jeffries retire at the end of 2014, will report its earnings Wednesday morning. For better or worse, this retailer is never dull. Your pets also have some earnings to look forward to Wednesday with PetSmart reporting PETM. Foot Locker FL and Staples SPLS report Friday morning.

2. Speaking of retail

There are sure to be headlines coming out of the twin Fashion Weeks taking place in the fashion capitals of Milan and Paris. Earlier this month, New York City held a Fashion Week that was said to have generated a huge amount of money for the city. The report, U.S. Rep. Carolyn B. Maloney, D-N.Y., the event generates more revenue for the city ($900 million) than the Super Bowl generated for New Jersey last year ($550 million).

3. February jobs report

Another month, another jobs report. This next one could show continued growth after a strong January report. Employers added 257,000 jobs in January. That signaled the 52nd straight month of employment gains. For more, check out Fortune’swrite-up at the time.

4. A confluence of conferences

It’s a huge week for conferences. For starters, the Game Developers Conference, a must-attend event for anyone in the video game industry, kicks off in San Francisco on Monday. Simon Carless, the executive vice president for the conference, told an ABC affiliate that virtual reality and the rise of indie game makers are two trends to pay attention to at the conference. Other events taking place include the Morgan Stanley’s Technology, Media and Telecom Conference (for more, check here) and the Mobile World Congress for mobile devices, which starts Monday in Barcelona.

5. Obamacare case goes to SCOTUS

On Wednesday, the Supreme Court will hear King v. Burwell, which has the potential to shutter Obamacare subsidies in 34 states that use Healthcare.gov, according to Politico. A ruling against the subsidies would go a long way to dismantling President Obama’s Affordable Care Act. There are 11.4 million people who are currently signed up for health insurance through the health care law.